Ex-Tyco Lawyer Says Firing Was Coverup

By Bob Van VorisMay 28, 2004

An attorney for former Tyco International Ltd. general counsel Mark A. Belnick said yesterday that the company's board fired Belnick because a director was trying to cover up his own improper financial deal.

Belnick attorney Reid H. Weingarten said Joshua M. Berman, a former outside director at Tyco, didn't want Belnick to discover that Tyco paid him a $30,000-a-month consulting fee that wasn't disclosed to the board or federal regulators. Belnick is on trial in New York on charges of grand larceny, stock fraud and falsifying business records.

Berman "had a significant legal problem," Weingarten told New York state Supreme Court Justice Michael J. Obus at a hearing yesterday outside the jury's presence. "There was every effort to get rid of Mark Belnick."

Assistant District Attorney John W. Moscow called the Berman issue "a red herring" that is irrelevant to Belnick's guilt on the charges against him.

Belnick, 57, faces as long as 25 years in prison if convicted on all charges. Prosecutors say he stole a $17 million bonus that wasn't authorized by Tyco's board and lied about almost $15 million in no-interest loans from Tyco on forms used to prepare reports to the Securities and Exchange Commission.

Berman, a lawyer, couldn't be located for comment. Berman resigned from Tyco's board in December 2002. He had joined the company's board in 1967.

Former chief executive L. Dennis Kozlowski and former chief financial officer Mark H. Swartz were tried on charges of looting Tyco of $600 million. The six-month case ended in a mistrial in April after a juror reported receiving threats.

Weingarten said he is trying to counter prosecutors' contention that Belnick was fired in June 2002 for refusing to cooperate with an internal Tyco investigation. Belnick's attorneys have tried to show that when board members learned the details of Belnick's bonus and loans, they voted to ratify them.

Berman, who disliked Belnick and feared disclosure of the payments, was behind Belnick's firing, Weingarten argued.

On cross-examination yesterday, former Tyco human resources director Patricia Prue testified that in February 2002 she provided the compensation committee of Tyco's board with a list of outstanding loans to executives, including Belnick. After learning that Belnick owed almost $15 million on no-interest loans to the company, the committee voted to approve a new employment agreement for Belnick.

Prue said that later, after she had provided the committee with more information about Belnick's pay, including a $17 million bonus in 2000, Berman tried to get the board to reverse its approval of Belnick's contract. The committee voted not to do so.

Under questioning by Assistant District Attorney Amy Schwartz, Prue said some board members discussed the possibility that Belnick might sue if the agreement weren't approved.

Prue testified she complained to superiors that Berman was pressuring her to help in getting the compensation committee to revoke its approval of Belnick's February 2002 contract.

Prue later sent a memo to superiors saying she would no longer let Berman contact her or her staff, she testified.

An attorney for former Tyco general counsel Mark Belnick, above, says Belnick was fired because a director was trying to cover an improper deal.